The Grenfell Tower disaster prompted the enactment of the Building Safety Act 2022. The Act focuses on the construction and maintenance of a high-rise buildings i.e. mainly those over seven storeys in height. The legislation also introduced financial protection for some tenants against the costs of putting right building safety defects.
The amount of protection depends on the status of a residential tenant on 14 February 2022. This, however, may cause issues for the current owners if they purchased their flat post February 2022 and cannot locate or contact a former owner of their flat to provide the requisite information to determine whether their lease qualifies for protection. Without input from the former owner, the service charge protection will not apply to the current owner.
There is no service charge protection if you are purchasing a flat from a seller who owned more than three dwellings (including the flat) in the UK on 14 February 2022 as this will disqualify a flat lease from protection under the Act.
Critics have suggested it is unfair to determine the protection afforded to the tenant of a lease solely based on the property’s ownership status on a specific historical date.
It could be the case that if a block of 20 flats which comes within the ambit of the Act, is split between 13 qualifying leases and 7 non-qualifying leases, the owners of the 7 non-qualifying leases could be met with uncapped service charge demands for remediating building safety defects whereas the remaining 13 qualifying leases will enjoy protection from those costs. It seems unjust given that the status of their leases is likely tied to the property’s previous ownership.
Whether this will create a difference in price between leases with protection and those without remains to be seen and is also likely to depend on the condition of the building. Where there is little risk of a building safety defect being present, lack of protection is less of a concern.
Even where a lease qualifies for service charge protection, it should be noted that the provisions of the Building Safety Act will only apply to:
- works (construction or conversion) that caused the building safety risk and were carried out between 27 June 1992 to 28 June 2022; and
- works undertaken after 28 June 2022 to remedy certain building defects.
It does not provide protection for putting right issues caused by works outside these timeframes and neither does it provide protection for costs of putting right any defects in buildings under 5 storeys in height. The protection afforded by the Act does not mean that tenants are absolved from paying service charges in respect of usual fire safety measures required for their building. It only relates to the costs of putting right certain building safety defects.
It is important to understand the risks associated with purchasing a leasehold property in a building caught by the Act, particularly where the vendor's lease is a non-qualifying lease and it is possible that there are building safety concerns. It is always recommended to undertake a suitable survey of a property and raise fire safety enquires with the landlord or its managing agents to understand potential risks before a purchase.